Shares of Raytheon Fall After Warning

Published: March 7, 2003

LEXINGTON, Mass., March 6—
Shares of Raytheon fell today after the company, maker of Tomahawk and Patriot missiles, warned that its results would miss Wall Street forecasts.

Raytheon warned after the close of trading on Wednesday that higher pension costs would cause 2004 earnings to miss average analyst forecasts by as much as 13 percent.

''Certainly, it's a matter of concern for analysts and portfolio managers, particularly for larger, older companies that have established pension plans,'' said Dean Gulis, fund manager for Loomis Sayles & Company. ''For some companies, it can be a multiyear issue.''

Raytheon said higher estimated pension costs of 30 cents a share would push earnings from continuing operations in 2004 to $1.60 to $1.70 a diluted share, below the $1.83 a share forecast by analysts surveyed by Thomson First Call.

Raytheon has struggled with delays at two Massachusetts power plants. It said labor costs at the plants would increase a fourth-quarter 2002 charge by $65 million to $75 million. The previous charge, first announced in January, had been $197 million.

Military stocks soared in 2002 as investors hoped a buildup for a possible war with Iraq would increase profits, but many of those stocks have erased gains as investors have taken profits.